Save Berkeley’s Neighborhoods v. The Regents of the University of California
(2021) (Case No. A160560)

In late October 2021, California’s First District Court of Appeal set forth an instructive rubric addressing the implications of failing to timely name real parties in CEQA lawsuits. The Court in Save Berkeley’s Neighborhoods v. The Regents of the University of California held that:

• Save Berkeley’s Neighborhoods (SBN) failed to timely name real parties in interest (American Campus Communities [ACC] and Collegiate Housing Foundation [CHF]) in accordance with CEQA’s requirements;
• ACC and CHF were necessary parties, as identified in the notice of determination filed by the Regents of the University of California (Regents), who were properly dismissed from the lawsuit due to SBN’s failure to name and serve them within the applicable statute of limitations period;
• However, the entirety of the lawsuit was not dismissed because ACC and CHF were not indispensable parties, as their interests were aligned with those of the Regents.

The Court’s decision also addressed the availability of interlocutory relief on ACC and CHF’s demurrers; provided an overview of Assembly Bill 320 (2012) and its corresponding amendments to the Public Resources Code, including how such amendments interrelate with California Code of Civil Procedure section 389(b); and considered the adequacy of notices of determination.

Factual Background

At issue in this decision was a project located at the University of California, Berkeley campus for the development of new academic, residential and parking buildings. The Regents filed a notice of determination for the project in May 2019, in which it identified ACC as the project developer and CHF as the ground lessee for the project’s housing component. In June 2019, SBN filed a petition for writ of mandate, challenging various aspects of the Regents’ supplemental EIR for the project. In September 2019, approximately four months after the notice of determination’s filing, SBN filed a first amended petition that was substantively identical to the initial petition but identified, for the first time, ACC and CHF as real parties in interest.

In response, ACC and CHF filed demurrers, asserting that: (i) SBN failed to name them as parties within the 30-day statute of limitations set by Public Resources Code section 21167, (ii) Public Resources Code section 21167.6.5(a) requires their joinder as real parties; and, (iii) they are necessary and indispensable parties, such that the entire action need be dismissed. The trial court sustained the demurrers without leave to amend, finding that ACC and CHF are necessary parties and were neither named or served in accordance with the operative CEQA provisions. But, applying Code of Civil Procedure section 389(b),[1] the trial court concluded that ACC and CHF were not indispensable parties, such that the action against the Regents must proceed.

The Court’s Holdings

Appealability

The Court rejected SBN’s argument that the appeal be dismissed because it stems from an interlocutory order. Citing established case law, the Court underscored that – in multi-party actions – a judgment disposing of all issues as to one party is immediately appealable, even if similar or identical issues as to other parties remain.

Necessary and Indispensable

After observing that the parties did not dispute whether ACC and CHF were necessary, the Court framed the issue as one of whether ACC and CHF were indispensable. If yes, the entire action would be dismissed. If not, the action would proceed, albeit without the real parties’ participation due to SBN’s failure to comply with CEQA’s limitation periods as to ACC and CHF.

Ultimately, the Court rejected ACC and CHF’s argument that their inclusion as section 21167.6.5 real parties on the notice of determination demanded a finding that they also were indispensable parties. As such, the Court affirmed the trial court’s decision, dismissing ACC and CHF from the action without leave to amend, but permitting SBN to maintain its action against the Regents.

Evaluating the issue, the Court undertook a detailed review of Assembly Bill 320 and its amendments to Public Resources Code sections 21108 and 21167.6.5. It first found that “[n]othing in section 21167.6.5(a) states an action against a lead agency must be dismissed for failure to properly name and serve the real parties in interest.” The Court then observed that section 21167.6.5(d) expressly “recognizes courts will apply the equitable balancing test” of Code of Civil Procedure section 389(b) (italics added), such that the failure to name real parties “may be grounds for dismissal” under that test (italics in original). Citing case law from the Third District Court of Appeal, the Court underscored that while the recipient of a contested approval is a necessary party, that recipient is not necessarily an indispensable party.

Applied to the facts at hand, the Court referred to existing case law finding that developers are often, but not always, indispensable parties in CEQA actions. The Court found a “strong unity of interest” between the Regents, ACC and CHF, given the interest of all with respect to the successful implementation of the project – a public/private partnership for development of the University of California, Berkeley campus. The Court distinguished the facts here from those where a developer singularly processes a series of entitlements that result in “no meaningful involvement by the government agency apart from the initial approvals.” As such, equitable factors did not demand dismissal of the entire lawsuit because the interests of ACC and CHF would be protected by the Regents during the action.

In reaching this determination, the Court also made note of the absence of an adequate remedy for SBN, should the entirety of the action be dismissed.

Notice of Determination

The Court rejected arguments advanced by SBN pertaining to the adequacy of the Regents’ notice of determination. In doing so, the Court refused to impose a new requirement for such notices to describe the environmental document’s baseline. Rather, the Court returned to the statutorily-delineated contents of such notices, as articulated in Public Resources Code section 21152(a). Further, there was no evidence that any perceived error in the notice was prejudicial, as SBN timely challenged the Regents’ action within the 30-day limitations period.

Takeaways

For CEQA practitioners, this decision illuminates:

1. CEQA’s requirement to name real parties listed in notices of determination serves to identify who is a necessary party, but not whether a party is indispensable – a topic otherwise subject to the balancing test set forth in California Code of Civil Procedure section 389(b).
2. The failure to name a real party does not trigger dismissal of the entirety of the CEQA action if the real party is not indispensable – in this instance, the interests of the Regents and real parties were found to be aligned, due to the public/private partnership needed to undertake and implement the contested project.
3. As a result, be careful what you ask for because woe is the real party that is dismissed from a lawsuit, cannot participate in the defense of the lead agency analysis, and is ultimately still bound by the judicial outcome.
4. A notice of determination is not required to be an exhaustive document – it must identify whether the project will, or will not, significantly impact the environment and be drafted in a fashion that does not interfere with a party’s ability to make an informed decision about whether and when to pursue a timely legal challenge.

[1] Section 389(b) directs courts to determine, “in equity and good conscience,” whether an action should proceed where a necessary party cannot be joined or should be dismissed without prejudice because the absent but necessary party is considered indispensable. Section 389(b) provides four factors for courts to consider when undertaking this equitable balancing text; the factors consider things like potential prejudice to the parties and whether adequate remedies remain available to the plaintiff in the event of dismissal.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]